Analysis of the association between economic growth, environmental quality and health standards in the Gulf Cooperation Council during 1980-2012

Abstract

Purpose The purpose of this paper is to investigate the validity of the environmental Kuznets curve (EKC) between gross domestic product (GDP) per capita and environmental indicators in the Gulf Cooperation Council (GCC) countries. Additionally, this paper also explores the relationship between health and income levels in the GCC to identify whether higher incomes necessarily affect overall health metrics. Design/methodology/approach The first part of this paper studies the relationship between GDP per capita and the greenhouse gases (GHGs) – carbon dioxide (CO2), nitrous oxide (N2O) and methane (CH4) (all per capita data). The second part of this paper explores the relationship between GDP per capita and the following health variables: life expectancy, infant mortality and child mortality – for GCC countries during 1980–2012. Unit root tests were conducted, followed by cointegration analysis, leading to Granger causality test and vector error correction model. Findings GCC states are highly dependent on fossil fuel production and hence depend on hydrocarbons for GDP growth. Most of the GCC states demonstrate lack of the EKC curve. However, there is evidence of U-shaped relationship between environmental pollutants and GDP per capita in kingdoms like Bahrain and Saudi Arabia (KSA). United Arab Emirates (UAE), on the other hand, demonstrates EKC, though not significantly. The study then explores the existence of potential relationship between health and GDP in the GCC, where it has been found that higher incomes have driven a better standard of living resulting in improved health metrics and higher life expectancy rates. Thus, growing incomes have played a positive role by improving health parameters and by offsetting some of the negative impacts from lack of environmental improvement as demonstrated by the absence of EKC in general in GCC. Originality/value GHG emissions data are individually and empirically examined for each country in the GCC. Furthermore, the study delves into the environmental problems that lead to health issues, which were initially caused by pollution. The results of the empirical analysis provide strong evidence that GCC countries need to rely less on fossil fuels, as lower productivity due to higher pollution reduces income and economic growth in most countries.